Palmer House retail hits auction block as Thor spars with hotel receiver

The shops at the base of Chicago’s historic Palmer House Hilton hotel will hit the auction block next month as owner Thor Equities tussles with the hotel’s lender and receiver over the pace of their takeaway.

The retail space at East Monroe and South State streets is scheduled to be sold to the highest bidder in a Cook County Sheriff’s sale scheduled for Sept. 6, after New York-based Thor allegedly defaulted on a $62 million loan against the retail space, according to court records.

Wilmington Trust filed a foreclosure suit in 2021 against Thor on behalf of a lender to the property, which includes 60,000 square feet of retail and a parking garage, according to previously published reports. The suit alleged that Thor hadn’t made payments since May 2020 on its $62 million mortgage for the retail space.

The 1,635-room hotel itself at 17 East Monroe, owned by a separate Thor entity than the retail space, became the subject of one of the city’s largest foreclosure lawsuits over a year ago after Thor defaulted on its $333.2 million mortgage.

A judge entered a $427.8 million foreclosure judgment against Thor’s hotel landlord entity a year ago, though a lender-driven sale of that portion of the property has not yet been scheduled.

The hotel is also at the center of a fight over much smaller amounts of money that Thor, the lender and the property’s court-appointed receiver say each is owed over use of facilities, court records show.

In February, the Thor-led ventures that own the hotel and retail space asked the court to direct the case to be resolved with a settlement, raising the issue that the receiver had not paid for the use of a portion of the office space shared with the hotel according to a licensing agreement.

The parties were “at an impasse” on proceeding with the sale of the property, Thor said in its motion. “To be pointed, defendants want to finish the litigation,” the motion reads.

In July, CHMWarnick’s Chad Crandell, the court-appointed receiver operating the hotel amid its foreclosure litigation, filed a new lawsuit against the Thor-led ventures that own the hotel, retail space and an office space next to the hotel.

At issue in that complaint is a building attached to the hotel that houses its air conditioning, phone and internet services. When Thor acquired the property, the firm divided the hotel, retail space and annex into three separate parcels and executed a reciprocal easement agreement to provide for access and usage rights amongst them.

The agreement also permitted the annex’s use of hotel facilities and obligated the annex owner to pay for their usage, per the complaint, which contends that Thor continues to use those services but stopped paying for them in March 2020.

Thor has said the firm is owed almost $900,000 under the terms of the licensing agreement and threatened to remove hotel property including mechanical facilities from the annex, a threat that would “cripple the hotel and materially harm its value and operations,” according to the receiver’s suit. The complaint also contends that the licensing agreement Thor cites expired in 2018.

The plaintiffs are asking a judge to rule that the licensing agreement doesn’t supersede the reciprocal easement agreement and that Thor has no right to the payment. The servicer and receiver are also arguing that they are owed $210,000 for the use of the hotel’s utilities.

A spokesperson for Thor, a global investment firm based in New York and led by Joe Sitt, didn’t respond to requests for comment on the scheduled auction and the litigation. An attorney representing Thor declined to comment.

The receiver was unavailable for comment. His attorney did not respond to a request for comment. An attorney for the trustee in the bondholders owed the debt from Thor, Wells Fargo, did not respond to a request for comment.

Read more

Chicago

New appraisals hammer offices

Chicago

Foreclosure ordered for Palmer House owner Thor Equities

Chicago

Thor's Palmer House hit with $300M+ foreclosure suit